Thank you for holding. This is the conference operator. Welcome to the Rogers Communications Inc. Fourth Quarter 2023 Results Conference Call. All participants are in listen-only mode and the conference is being recorded. After the presentation, we will have a question-and-answer session. I will now turn the conference over to Paul Carpino, Vice President of Investor Relations at Rogers Communications. Please go ahead, Mr. Carpino.

Thank you, Ariel, and good morning everyone, and thank you for joining us. Today, I am here with our President and Chief Executive Officer, Tony Staffieri; and our Chief Financial Officer, Glenn Brandt. Today's discussion will include estimates and other forward-looking information from which our actual results could differ. Please review the cautionary language in today's earnings report and in our 2022 Annual Report regarding the various factors, assumptions, and risks that could cause our actual results to differ. With that, let me turn it over to Tony to begin.

Thank you Paul, and good morning everyone. I'm very pleased to report that Rogers delivered another record quarter. This reflects the eighth consecutive quarter of growth and momentum for our company. As I reflect on the year, we delivered industry-leading results, completed an industry-leading merger, drove industry-leading innovation, and returned to number one in virtually all key growth metrics. Let me start with our full year results. In 2023, we delivered on our commitments. We met our increased financial guidance and grew service revenue by 27% and adjusted EBITDA by 34%. In a very competitive and growing market, more Canadians chose Rogers over any other competitor for the second year in a row. In 2023, we attracted 674,000 postpaid mobile phone net additions, up an impressive 24%. This was driven by disciplined execution, leading distribution, and attracting new Canadians. Simply put, we've outperformed our competition for two straight years. Over the past two years, we've attracted an impressive 1.4 million Canadians across our mobile and internet services. This is the best performance in our industry and in our company's history. We achieved this customer growth while maintaining disciplined execution to deliver healthy financial results, and we delivered positive total shareholder returns for the second straight year. In cable, we continue to accelerate market share in the East and West. This quarter we attracted 20,000 new internet customers, more than double over last year, and we achieved industry-leading margins of 56%. There's more work to do, but we're heading in the right direction. Overall, the team is firing on all cylinders and executing with discipline. Second, we completed our historic merger with Shaw. In April, we closed the largest financial transaction in Canadian telecom history, and we continue to deliver healthy organic growth. In nine short months, we have largely integrated the two companies and delivered impressive results. We upgraded 450,000 Shaw mobile customers from the Freedom Network to Canada's largest and best 5G network. Teams across the combined organization, operations, customer service, network, and IT are now integrated, and our ERP system transition is proceeding as planned. From a customer perspective, we introduced Rogers' internet and TV services in the Shaw footprint, and we launched new bundled offers. We rebranded our corporate retail stores and started selling wireless and residential services in our retail channels. We also grew Rogers' brand presence in a meaningful way. Today, Alberta and BC are our fastest-growing markets and we're gaining healthy market share. We said we would increase competition in the West, and we have. We've doubled the size of our cable business and cable footprint overnight. This is a scale business, and the power of scale is starting to show, giving customers more choice, and they're responding favorably to the Rogers brand. This disciplined execution translated into strong financial performance. In 2023, we realized synergies of $375 million and exited the year with a $750 million annual run rate. This is six months ahead of schedule. We also reduced our debt leverage ratio to 4.7 times at year-end. This is down over half a turn in just nine months, driven by synergy cost reductions, earnings growth, and the payback of acquisition-related debt. We're well on our way to de-leveraging our balance sheet back to pre-Shaw acquisition levels and doing it ahead of plan. Third, we invested and delivered a number of important innovations. We signed exclusive agreements with SpaceX and Lynk Global to bring satellite to mobile coverage to Canada. We made the country's first satellite to mobile phone call and we're on track to introduce our satellite services to Canadians this year. This technology is critical to connect rural and remote parts of the country. We invested to bring satellite sensors and AI cameras to better predict and detect wildfires in remote areas, and we're leveraging this technology across the nation to assist with other natural disasters that are on the rise. We acquired BAI Canada and introduced 5G service to all subway riders on the TTC. We invested in digital innovation to drive efficiencies and margin expansion. For example, in Rogers' business, we eliminated 70,000 hours of manual work through automation, which accounted for 78% of wireless volume last year, and we were awarded Canada's best wireless network for the fifth year in a row. In 2023, we invested a record $4 billion in network and innovation, and we'll continue this record level of investment in 2024. This morning, we also announced the first network slicing trial in Canada. We tested this new technology with Ericsson across Toronto, Montreal, and Vancouver using our standalone 5G core network. This innovation will materially change how our network operates, offering multiple lanes for wireless traffic. We will offer a dedicated lane for first responders, so they will always have priority on the network, and we can separate fixed wireless access traffic. So as we expand our FWA offering across the entire nation, we will not have to worry about congestion for our smartphone customers. This is truly a game changer for Canadians, and we're proud to bring this to Canada first. Looking ahead, we will launch our 10G and DOCSIS 4 internet roadmap to deliver the next generation of internet and entertainment services to Canadians. More investment and more innovation, this is our commitment to Canada and to Canadians. Finally, before I turn it over to Glenn, let me touch on guidance. This morning we announced industry-leading guidance for 2024. This outlook reflects our clear focus, disciplined execution, and unrelenting ambition to lead the market and be number one. It reflects a third year of strong service revenue and EBITDA growth. It reflects record levels of investment and it reflects strong free cash flow growth. At the same time, we expect to continue de-leveraging at the same rapid pace. It was a record-breaking year and I'm very pleased with our progress. I would like to thank our entire team for their relentless commitment to driving growth and innovation. Let me now turn the call over to Glenn.

Thanks Tony and good morning everyone. Thank you for joining us this morning. Rogers' fourth quarter results reflect our eighth consecutive quarter of strong execution. These results highlight our continued success in integrating Shaw, which remains six months ahead of plan from a synergy and de-leveraging standpoint. Our Q4 results also reflect strong momentum and another quarter of industry-leading operating and financial metrics to cap off a very strong year. We have delivered on our 2023 guidance and we are optimistic about our growth opportunities for 2024, as reflected in our 2024 guidance release this morning. Let me start with the highlights from our fourth quarter results. In wireless, we once again delivered what we anticipate will be industry-leading market share and results. Service revenue increased a strong 9%, reflecting healthy and disciplined growth in our mobile customer base. Consistently for eight consecutive quarters now, Rogers has delivered industry-leading wireless net additions combined with strong disciplined financial performance. Simply put, more Canadians choose Rogers than any other carrier, and that trend continued through the fourth quarter. Postpaid mobile phone customer net additions were a very robust 184,000 in the quarter, once again, heavily concentrated in our premium Rogers brand. Rogers led in market share in a very active and competitive wireless market. On a full year basis, 2023 postpaid mobile phone net additions reached record levels at 674,000 customers, up 24% year-over-year, well ahead of our two national peers. Consistently for two years now, our strategy has been to drive loading on the Rogers brand with its robust 5G premium service offerings and value for customers. As a result, Rogers not only led in market share, but also delivered positive underlying ARPU in a highly competitive environment. On a pro forma basis, adjusted to remove the impact of integrating a half million Shaw mobile subscribers, ARPU increased a very healthy 1% year-over-year. This sustained positive ARPU growth combined with very strong overall service revenue growth, EBITDA growth, and market share highlights once more the effectiveness of our premium brand strategy. As reported, wireless ARPU was $57.96, which was down 1% when including the impact of integration of roughly a half million Shaw mobile subscribers on discounted bundled offerings. Postpaid mobile churn in the quarter was 1.67%, that's up 43 basis points year-over-year, reflecting an increase in the seasonally heightened promotional activity occurring in the Black Friday through Boxing Week period. However, once more, I emphasize that with our sector-leading postpaid net additions, continued emphasis on our premium Rogers brand, and growth in service revenue, EBITDA, and underlying ARPU, we very effectively balanced our priorities, and I'm pleased with the outcome. And so through all of that, wireless adjusted EBITDA was up 10% year-over-year, and our adjusted EBITDA margin grew by 70 basis points to 64%. Moving to our cable business, we continue to execute very well against our efficiency targets and we are delivering on our cost synergies roughly six months ahead of plan in what remains a highly competitive market. Cable revenue was up 95% year-over-year as a result of the Shaw acquisition and an increase in our retail internet base. While we continued to see a high level of promotional competition from our major peers, we had reasonably strong retail internet net additions of 20,000 in the fourth quarter, up 13,000 year-over-year, and in particular, we continued to see positive momentum and growth in the West. Offsetting the competitive pressure on revenue growth, our cost synergy and efficiency efforts are producing very strong results. Cable adjusted EBITDA was up 113% and we reported an adjusted EBITDA margin of 56%, up 490 basis points year-over-year. For the full year, cable adjusted EBITDA margins improved 330 basis points. Cost synergies realized in year totaled $375 million and we exited 2023 at an annualized run rate of cost synergies achieved of $750 million on a target of $1 billion when we first launched Shaw. We recognize there is more work ahead on bringing our cable business back to positive and healthy organic revenue growth, but we believe we have the right priority focusing on premium services and profitable growth, and we are targeting further improvements in 2024. Finally, in our sports and media business, media revenue was down 8% and adjusted EBITDA was a positive $4 million versus $57 million in the fourth quarter of last year. The decrease in both revenue and adjusted EBITDA year-over-year was primarily the result of lower sports-related revenue, most notably reflecting an extraordinary distribution received from MLB in the fourth quarter of 2022, which did not repeat in 2023. While the advertising market remains challenged, we believe our high-quality media assets and our focus on sports will remain a critical contributor to our sports and media business going forward. Ad revenue remains a positive contributor to media revenue growth in large measure as a result of our live sports content. At a consolidated level, Q4 service revenue increased 30%, and adjusted EBITDA was up by 39%. This resulted in strong margin expansion with adjusted EBITDA margin increasing by 340 basis points to 44%. Q4 adjusted net income increased 14% to $630 million reflecting the flow through of higher adjusted EBITDA. Capital expenditures in the quarter were up 19% year-over-year to approximately $946 million with almost half directed towards our cable operations. The 22% increase in capital expenditures predominantly reflects the acquisition of Shaw. Network and customer investment remain our priority as we deliver on our network expansion efforts, launch new transformative technology products and services, and capitalize on growth opportunities in the West. Even with the increase in capital expenditures, we saw our capital intensity decline approximately 100 basis points in the quarter to approximately 18%, and after-tax free cash flow grew 30% year-over-year to $823 million. These achievements have enabled us to already start paying down our acquisition debt in part with funds from operations. During the fourth quarter, we also committed $475 million for 40 megahertz of 3,800 megahertz spectrum, buying up to our 100 megahertz spectrum cap across 172 regions available under the spectrum auction. The acquired 3,800 megahertz spectrum compliments our industry-leading 3,500 megahertz 5G spectrum over Canada's largest 5G network covering urban centers, cities, and towns and rural and indigenous communities from coast to coast. Rogers continues to hold the largest individual portfolio of wireless spectrum among Canadian telecom operators. Payment for this 3,800 megahertz spectrum will be made in two installments. $95 million was paid in January and a final payment of $380 million will be paid in May 2024. Turning to the balance sheet, our financial position remains very strong. At year-end, we had $5.9 billion of available liquidity including $800 million in cash and cash equivalents and a combined $5.1 billion available liquidity under our bank credit facilities. Our weighted average interest rate on all borrowings is under 4.9%, and our weighted average term to maturity is 10 years. We remain very comfortable with the strength of our balance sheet funding and overall liquidity. Our leverage ratio at year-end improved to 4.7 times, down from 5.3 times announced at the Shaw close, a pace roughly six months ahead of schedule. De-levering remains a critical focus, and we anticipate leverage will continue to improve by roughly a half-turn through 2024 from a continuation of earnings growth, proceeds from asset sales, and from using free cash flow to pay down debt as we work to restore leverage and credit ratings back to pre-acquisition levels. Succinctly, prudent capital management, focused execution on cost synergy generation, and EBITDA growth combined with targeted selling of non-core assets is working and we are de-leveraging ahead of schedule. Once again, I'm very comfortable with our progress on this initiative. In December, we took advantage of an opportune rise in Cogeco’s share price and sold our entire holdings in Cogeco for $827 million with the proceeds directly and immediately applied to debt reduction. Additionally, and as previously mentioned, we are in the process of divesting non-core assets with targeted proceeds of $1 billion, predominantly real estate assets, and targeted to close in 2024. In the fourth quarter, we returned $265 million in dividends to shareholders, of which $190 million was paid in cash and $75 million was paid in Class B non-voting shares under our dividend reinvestment program, a participation rate of approximately 28%, generating roughly $300 million in annualized cash preservation. On a consolidated basis for the full year, total service revenue grew 27% and adjusted EBITDA grew a healthy 34%. Capital expenditures came in at $3.9 billion, and free cash flow for the year was over $2.4 billion, each well in line with our upgraded 2023 guidance. Overall, we are very pleased with our results for 2023. This year was about driving growth and efficiency while executing on our plans to integrate Shaw and de-lever our balance sheet. From the day we first closed on Shaw, we have prioritized and delivered on guidance, on cost synergy generation, and on market leadership. In terms of our outlook for 2024, we are forecasting another year of strong top and bottom line growth and strong underlying free cash flow growth. We anticipate total service revenue growth in the range of 8% to 10% and adjusted EBITDA growth in the range of 12% to 15%, targeting another year of industry-leading performance and growth. We anticipate capital expenditures to be in the $3.8 billion to $4.0 billion range, and free cash flow is expected to be in the range of $2.9 billion to $3.1 billion, a very healthy increase from our 2023 free cash flow levels and providing substantial and growing heft to our delivering. Our performance over the past two years, combined with our 2024 outlook reflects a focused company. We will continue to grow, generate strong free cash flow, and de-lever our balance sheet as we said we would when we announced the Shaw deal almost three years ago. 2023 has been transformative for Rogers, but we are just starting. We delivered strong results and executed very well on the largest telecom acquisition in this country's history. The work effort has been substantial, and I want to thank all of the members of our incredible team of professionals who show up each day dedicated to our customers and committed to each other. Together, we continue to lead and strive for more, and I'm honored to work alongside each one of them. We accomplished a lot in 2023, and the look ahead for 2024 is bright and full of opportunity. Thank you for your time this morning. With that, Ariel, could you please commence the question-and-answer? Thank you for your attention and time this morning.

Thank you. Our first question comes from Tim Casey of BMO. Please go ahead.

Good morning. Can you hear me okay?

Yes, we're good, Drew. Good morning.

Yes, good morning. So nice to see all the steady progress here. Two for the points of clarification, I guess, on the timing of the remaining synergies, good to see the higher exit run rates on Q4. The remaining $250 million, can you just speak to what's left to go and what you're expecting in terms of timing there? And related just to that, the EBITDA growth range of 12% to 15%, what kind of puts and takes get you to the bottom end versus the top end? And then the second question, just on the cable side. I think you did kind of 3% down underlying cable revenue growth last quarter. Just wondering what it would have been this quarter and particularly just given the uptick in ARPU that we saw? Thanks.

Sure. Thank you, Drew. On the remaining synergies, the emphasis continues to be as we've done for three quarters now, hold the gains that we've identified and achieved through the last nine months, carry them throughout the year in 2024, and build on them. We are largely through the people part of the integration exercise. We've got our team in place. There will be ongoing tinkering and tweaking here and there in terms of moving people. But that part of the exercise is largely complete. We got that done within the first half year, frankly, of the acquisition. We had anticipated a longer run rate on that. So very, very pleased with getting that done in the first year. It settles the organization down. We will now be focused on primarily the vendor negotiation part of the exercise. Our Cable business is now twice the size and scale that it was pre-acquisition. And so now we set to work on negotiating with vendors reflecting that scale. And so that's really the largest part of the lift going into 2024. Remaining, we will look to fill in the $1 billion targeted synergies as early as possible in a year. I anticipate, as we exit 2024, we will have achieved the run rate on the full $1 billion, but I'm not going to provide any additional clarity on timing around that. In terms of what impacts could affect us to come in at the higher or lower end of that 12% to 15% EBITDA growth range, I'm not going to provide any additional speculation on the positives or negatives that could come through the year. I think we've shown through 2023 that we've taken a very balanced approach to our operations and our execution; that will continue in 2024. We will remain competitive in going after market share and going after cost improvements and efficiencies as well as continuing to drive revenue growth. On your question on cable revenue growth, we continue to see the decline through the fourth quarter in the range of 3% on a pro forma basis when you take out the effect of the acquisition. And so that will be a primary focus for us in 2024, not only going after larger execution on our net additions and customer growth, but also in terms of trying to just turn that revenue decline around as early in the year as we can. But that's going to take some time to balance.

That’s great. Thanks for that.

Thank you Drew. Next question, Ariel.

Our next question comes from Tim Casey of BMO. Please go ahead.

Thanks, I have two questions. Tony, there has been a lot of discussion in the media about the reduction of foreign student visas and similar topics. This is an area where Rogers has performed well. Can you provide your perspective on how you think these changes will affect the loading environment moving forward? Additionally, you briefly mentioned network slicing. What is the current status of 5G and its full deployment? I know you won’t be utilizing the 3,800 this year, but are you observing any developments on the enterprise side or any factors that might change the narrative around 5G and potentially lead to incremental revenues? Thank you.

Thank you for your questions, Tim. Regarding your first question about foreign students and government statements, our estimate for wireless growth in 2023 indicates that the overall market has increased by over 5%. This growth stems approximately from half due to higher penetration and the other half from newcomers to Canada. Both categories are experiencing strong growth. Following the government's announcement, we still anticipate that market growth rates will exceed 4%, likely nearing 4.5%. This indicates a very healthy market, and we expect to maintain our leading market share. While there will be some impact, we view it as minor relative to overall market growth. As for your second question about our announcement on network slicing for our standalone 5G core network, these developments are closely related. The applications are set to target various use cases, including enterprise needs. One application we're particularly enthusiastic about is enhancing network clarity for first responders to ensure they receive priority access. Additionally, this advancement will support our fixed wireless access deployment strategy by increasing capacity. While we continue to see enterprise applications, they will be of secondary importance. We anticipate that by midyear, some of these applications will start to emerge, and we will provide updates in future calls.

Thank you.

Thanks Tim. Next question, Ariel.

Our next question comes from Sebastiano Petti of J.P. Morgan. Please go ahead.

Thank you for your questions. I would like to follow up on Drew and Tim's inquiries regarding the team's perspective on share performance expectations as we head into 2024. You seem quite confident about maintaining your leadership in market share. However, considering the industry's current landscape, how are you weighing the balance between pricing and volume in relation to service revenue growth for Rogers in 2024 and the future? Also, regarding cable, it's encouraging to hear positive developments in Alberta and British Columbia. Glenn, you mentioned aiming for improved ARPA and returning to revenue growth. What factors will contribute to this, especially in light of earlier announcements about price or rate increases? Is it primarily about volume, or are there other elements that will play a role in helping us regain cable revenue as we move through 2024? Thank you.

Thanks for the question, Sebastiano. I'll start with the first one in terms of our share performance, and I take it you're referring specifically to Wireless. The drivers of our success have really been a number of factors that have helped the execution. But again, it's against the backdrop of a very strong growing market that we've really leaned in on our distribution channels, the simplicity of the customer experience, a number of other value offerings we've surrounded the customer with, including we launched in Q4 the ability for customers to amortize their smartphone purchase on our Rogers credit card over four years, effectively cutting payments in half. And so there's all those things around, as I said, the best-in-class distribution channel. The second piece of it relates to how we do in various market segments, and there are two comments there that are worth highlighting, certainly in the new to Canada category. We continue to dominate in market share, and it's something we've been paying attention to over several years. And you're seeing what I would describe as that selling infrastructure continuing to outperform. Certainly, we expect continued competition in that space, but we feel fairly confident about our performance there. And then the last piece I'd make is underlying all that is our execution of a move to the Rogers premium brand. We stated we were moving towards that several years ago. And so what you see happening is this is our strongest quarter of performance on the Rogers brand when you look at relative share. And so our strategy of focusing on the premium brand in both Wireless as well as in Cable is paying out well for us.

And then Sebastiano, on your second question around our focus and emphasis on reversing the revenue trend within our Wireline business. Cable is a scale business and similar to wireless, if you look at wireless, that scale is tremendously powerful when you execute correctly and focus on real growth. You've mentioned is it going to turn on price increases. Really, the emphasis here is on better execution around growing the subscriber net adds and the subscriber base. Leaning in on better execution around customer service, growing our network footprint, continuing to make gains, particularly in the West around growing our competitive offerings within the West and growing the net adds. And so the emphasis here really is, in particular, on growing the underlying business volume rather than anything else. It comes down to execution and taking advantage of the scale. That really was the original promise in the acquisition initiative. And so that's what we're focused on.

I would like to quickly follow up, Tony, regarding the wireless side. As Rogers, you've done an excellent job transitioning to the premium brands. You mentioned the underlying growth excluding the migration of Shaw Mobile subscribers. As we look ahead to 2024, will the service revenue follow a similar P-times-Q equation, or do you think we might see improvements in ARPU as the business capitalizes on the benefits of the premium brand transition in 2023? That’s what I'm trying to understand.

Yes. The way we think about Sebastiano is to use your term, the P-times-Q. We continue to see very healthy growth on the Q or number of subscribers. In terms of ARPU, what we see is opportunity for ARPU growth, but it's marginal. It will be in a solid 1% this year, and we'll need to continue to see the market dynamics. But I don't want to overstate the ARPU side of it.

Thanks again.

Thanks, Sebastiano. Our next question, Ariel.

Our next question comes from Vince Valentini of TD Cowen. Please go ahead.

Thanks very much. Hoping I can get two clarifications in and then a question. Glenn, were you deliberate in your commentary on the $1 billion of asset sales, saying it will happen sometime in 2024 as opposed to you had been signaling by the middle of the year before?

Some we will close in the first half of the year. Some might fall into the second half. We will execute at the earliest possible opportunity remains on pace with what we had tried to signal in. So I'm not looking to try and change any of the messaging. I'll be happy if we continue at pace with where we are today, and we will continue to work that file ongoing through this year and beyond.

Fair enough. The clarification for Tony, you mentioned the over 5% or greater Wireless industry growth in 2023. Rogers obviously did better than that in the range of 6%. So when you say market 4% to 4.5% going forward, I assume you're still talking about the industry and your hope would be Rogers does better than the industry?

That's right, Vince. The 4% to 4.5% I would say is conservative in terms of our estimate. And so that's one to note. And two, we expect to continue to lead with strong market share. And so that underlies how we think about top line growth for Wireless for this year, which ladders up to our consolidated guidance.

I'm surprised this topic hasn't come up yet. Churn is at its highest level in a long time. You've managed to offset this with strong gross additions, ARPU, and EBITDA, but does the current churn rate of 1.67% worry you? Is there competitive pressure in the industry contributing to this high churn, or can you implement strategies to reduce it? Additionally, could you clarify the impact of churn costs? It doesn't seem to be reflected in EBITDA, yet your equipment receivables have increased significantly, rising to 433 from around 300 in the last quarter of the previous year. Is this where you are feeling the pressure of subsidizing more gross additions through receivables? Thank you.

Thanks for the follow-up, Vince. It's essential to analyze the churn. To get straight to the point, we are not worried about our churn figures for several reasons. First, we noticed an increase in promotional activity in the lower segment of the market during the fourth quarter, mainly related to flanker brands. We decided to concentrate more on the premium segment rather than neglecting the lower end. As a result, our gross additions have increased significantly year-on-year, predominantly under the Rogers brand. Regarding churn, the majority stems from the Fido brand. Additionally, we serve many newcomers to Canada, particularly foreign students and temporary workers, which contributes to a healthier gross additions figure while also affecting churn numbers. Overall, we feel confident in our net growth and believe we have the right balance across our brands to maintain strong ARPU. Another point you mentioned, Vince, is that our switching costs have decreased significantly. Our acquisition costs have become much more efficient. For instance, in the fourth quarter, our equipment margins were slightly positive, contrasting with a $12 million cost in Q4 of 2022. Handset subsidies and related costs are either neutral or slightly more favorable. Moreover, the cost of transaction related to acquisitions keeps declining, which is noticeable even with significantly higher volumes year-on-year, resulting in a nice margin improvement of 70 basis points in our Wireless business.

That's excellent, Tony. Just to clarify, you believe that the 1.67 is not a result of undisciplined behavior by Freedom or any other flanker brand, and you are comfortable that this is a manageable figure that you can work around?

We're not worried about it. As we look at Q1, a month into it, we do notice ongoing heightened churn compared to last year, but it isn't as significant as one might expect. So, again, it isn't a concern for us.

Thank you.

Thanks Vince. Next question, Ariel.

Our next question comes from Maher Yaghi of Scotiabank. Please go ahead.

Great, thank you for taking my question. And if you can permit me with two clarifications like Vince had and a real question. So just on the clarification question on can you provide, Glenn, if you can, the pro forma growth rates on EBITDA for Cable and Wireless, excluding the acquisition of Shaw, I know it's going to start to become less and less relevant going forward, but we're still transfixed on that, I guess, the Street? Also, if you can maybe clarify the reporting dynamics over the 182,000 Internet subscribers that you took out from your reporting related to the Internet subscribers, how do these changes affect ARPA and the net adds; are they showing up somewhere else now, or they're just not being reported? And I'll wait and ask my real question after that. Thank you.

Okay. Maher, I'll start with the second question relating to Fido because it aligns with the strategy we've talked about of consolidating to the Rogers brand. So in Internet, in our base, roughly 4% of our total base. So we're talking about a real small number of Fido customers. What we've done because we discontinued that brand, the accounting is to take it out of the base. It doesn't mean we are writing off those customers or ignoring those customers. We will actively look to migrate those customers to the Rogers premium brand, and we'll account for those as base adjustments. So it has an immaterial impact on ARPA, and it had an immaterial impact on our Internet net adds. What you saw in the Internet net adds was not impacted by what I would call that disclosure change.

Regarding your question about our adjusted or pro forma or organic growth rates for Wireless and Cable, the impact of Shaw Mobile customers on year-over-year growth rates was quite limited when considering the overall business scale. Throughout the year and particularly in the fourth quarter, we saw consistent results. In the fourth quarter, we achieved a 9% increase in revenue and a 10% growth in EBITDA, which were mainly unaffected by the Shaw Mobile additions that took place throughout the past nine months, especially in the latter half of the year. For Cable, on an adjusted basis related to the transaction, we experienced a 3% decline in revenue and approximately 12% pro forma growth in EBITDA, primarily due to the cost synergies we have realized so far. Does that help?

Thank you very much. I have a broader question for you, Tony. Rogers has been doing well in capturing a fair market share with new immigrants and Canadians coming to Canada. However, I want to ask about the Shaw stores in the West. I assume you are utilizing them more for wireless sales by integrating cable and wireless offerings. How is the retail presence you gained from the Shaw acquisition contributing to your market share growth in wireless in Western Canada? Additionally, regarding your strategy to de-emphasize Fido and transition many customers to Rogers, can you provide insights on the cost savings resulting from this change in your sales approach? Thank you.

Thanks, Maher. Let me clarify at the outset, you made the comment we're getting more than our fair share. I would characterize it as we're getting the share we deserve and we earn every day. Canadians have choice and they're making their choice. And so that's one. In terms of how that's playing out in our stores in the West, I would say more broadly, and we've talked about this on previous calls, we are expanding our retail locations to more and more cross-sell on the bundle and make it easier for the customer to purchase their home Internet and entertainment services at our retail locations. And so certainly, with the closing of Shaw, that was a big advantage to us to rebrand the Shaw stores to Rogers and increase the penetration of the bundled sale. I would say it continues to be early days on that, and we're under-penetrated in terms of bundles. And so we look that to be a good growth opportunity for us in promoting strong sales certainly in Wireless. But importantly, on the Internet side, which is, I would say, it's just at the beginning of acceleration. And then the final point in our brand consolidation strategy and what it means for our cost structure, it's a bit too premature to start sharing that type of stuff. You're certainly seeing some of it come through in our wireless margin expansion and leading industry margins already. But I'm not prepared to start quantifying the different pieces of it, Maher.

Okay. Thank you.

Thanks, Maher. Next question, Ariel.

Our next question comes from Stephanie Price of CIBC. Please go ahead.

Good morning. I wanted to focus in on the CAPEX guidance, and I was hoping you could talk a little bit of the buckets of CAPEX investment here, whether it's 5G, DOCSIS and whether we can see any CAPEX synergies with Shaw in the guide, and maybe more broadly how you think about network investments internally and what percentage of the CAPEX envelope you think of as growth versus just baseline?

Thank you, Stephanie. Good morning. I think if I could maybe not give you quite the specifics that you're looking for, but just in general, we remain committed on investing more and more of our annual capital spend in network infrastructure and hard infrastructure as opposed to other projects and so that continues. The impact of the Shaw acquisition allows better efficiencies certainly in terms of how far those dollars go, I'm not going to give any particular clarity to that. The $1 billion of targeted synergy savings, those are just on the cost side, but we do see benefits that also accrue on our capital spend as a result of the scale. We've now got twice the route kilometers of network roughly from the acquisition on the wireline side. And so our service contracts are gear purchases, those all we lean in on negotiating the rates. Those all reflect now a roughly 2x volume, and we drive the savings that you would anticipate in those negotiations. That will continue in 2024. And so I anticipate gains that come from that. You can see from our guidance, we still intend to invest significantly this year in the range similar to what we had in 2023, and that is predominantly on expanding our coverage and our footprint.

Thanks. And then just for my second question, Tony, your prepared remarks mentioned expanding fixed wireless nationally. Just curious how you think about fixed wireless here, is it just for remote regions or could we see Rogers rolling out more broadly as we've seen in the U.S.?

We launched it with a soft launch in the fourth quarter and are now expanding it into a more robust offering. It's national, primarily focusing on rural areas, but may also include urban locations where we lack a wireline presence. We have a wireline cable footprint covering two thirds of the country, leaving one third uncovered. Our focus will be on fixed wireless access in those markets, along with TPIA. Acquiring Comwave in the fourth quarter provided us with a platform to offer home Internet and bundle products with our existing national wireless coverage. This is the strategic direction we are taking, and network slicing plays a significant role in that.

Thank you.

Yeah, thanks Stephanie. Next question, Ariel.

Our next question comes from Jerome Dubreuil of Desjardins. Please go ahead.

Hey, good morning. Thanks for taking my questions. The first one is a follow-up to Stephane's question on network slicing and what it allows you to do in terms of expanding fixed wireless. A clarification on your comment on urban, I would imagine that's more when you don't have cable, right? And then the second one on this is what does that mean in terms of your potential investments in wireless capacity?

Thank you for the question, Jerome. Regarding slicing, we see it as an opportunity for customers to access better network performance through our cable network, depending on their location. Some customers, particularly foreign students who are here temporarily, prefer the convenience of fixed wireless access. This allows for a smoother internet experience in their dorms or apartments, making it easier and more cost-effective to connect and disconnect. We're strategically considering how to implement this in urban areas, as well as in underserved regions like Southwest Ontario and Quebec, which are important markets for us moving forward. As for wireless capital expenditures, we're within our budget. However, a key factor for enhancing fixed wireless access performance is the availability of more spectrum. We look forward to government initiatives to increase spectrum availability, which is a significant differentiator between the Canadian and U.S. telecom markets. The U.S. industry has greater access to spectrum capacity, and as we catch up, we believe fixed wireless will become a strong growth area for us.

That's good information. My second question is whether investments in DOCSIS 4.0 are included in this CAPEX guidance, and what will be done regarding DOCSIS 4.0 within that CAPEX plan this year?

I'll start with the first part from a technology strategy standpoint. We've said and continue to be on the path to work hand-in-hand with our U.S. Cable partners in the evolution of 10G and DOCSIS 4. And so we've, in anticipation of that, been working aggressively on mid to high split into our network. The West is largely done, and we're now focused on the East, which will make significant headway this year on that. And that's a precursor to DOCSIS 4 which some of the U.S. players are already in trial mode. You will have seen that. And you expect us to move to trial mode by midyear roughly, depending on CPE availability. That's the biggest capacity constraint for us, and so that's on the strategic side, and I'll let Glenn talk to where it fits in the capital envelope for Cable.

Yes. I think just succinctly, it is part of our priorities and initiatives in that $3.8 billion to $4 billion CAPEX guidance we've given. And so that's one of the key initiatives and the modernization of our network plant, it's just always ongoing.

Great.

Thank you, Jerome. Our next question, Ariel.

Our next question comes from Aravinda Galappatthige of Canaccord. Please go ahead.

Good morning, thanks for taking my questions. A quick clarification, I think it was Glenn, you mentioned close to 1% ARPU growth adjusted for the Shaw Wireless subs. Can you just talk to the impact that international roaming had on it, was it positive, negative, was it material? And then secondly, just going back to the Cable topic. In terms of sort of sequential improvement. I know that you said that stabilization may be right at this point that talk about timelines, but in terms of sequential improvement, any markers you can give and I'm trying to understand the extent to which the competitive intensity even in Ontario is affecting that negative 3 number and are you seeing any sort of easing there that can kind of help the cause? Thanks.

Thank you, Aravinda. Regarding the 1% ARPU growth, the impact from roaming is seasonal, and we still observe ongoing effects from it. However, in terms of year-over-year changes, that has mostly balanced out at this stage. The 1% growth primarily reflects our focus on base management and our premium brand execution, rather than external factors from international roaming, whether through ads or other means. I’ll let Tony address the competitive intensity related to Cable.

Aravinda, regarding your question about what will drive top line growth, the decline you see is mainly due to market share losses from previous years. The key factors to focus on for growth are our penetration and market share gains. As we address various initiatives, including enhancing our distribution channels and maintaining our top-tier internet product, these will be significant contributors to our return to revenue growth. We will also be introducing new products, such as the 10G DOCSIS 4, and improving the entertainment experience. Our collaboration with Comcast and the Xfinity platform will lead to next-generation launches, and we are optimistic about their potential.

Thank you.

Thanks, Aravinda. Ariel, we will do three more quick questions please.

Our next question comes from Batya Levi of UBS. Please go ahead.

Great, thank you. Just a couple of quick follow-ups. One on the Wireless churn side. It'd be helpful to just get a sense on how churn looks for the Rogers brand only and how that compares to the year-ago period. And on the competitive intensity, you mentioned it was pretty heightened, do we see a return to more normal levels in January? And how do you expect the recent price increases to impact churn? Thank you.

I'll start with the second part of your question. In regards to the competitive intensity in the fourth quarter, it is indeed the traditional period for promotional activity. Typically, as the market quiets down in January, you see a reduction in that promotional activity, which is what has occurred this January, as is usually the case. Regarding the first part of your question about churn, we are very pleased with the churn dynamics for the Rogers brand. The churn for Rogers is significantly lower than that of Fido for various reasons, which highlights our focus on the lifetime value of that customer segment, reflected in the ARPU growth.

Got it, thank you.

Thanks Batya. Next question, Ariel.

Our next question comes from Simon Flannery of Morgan Stanley. Please go ahead.

Hey, thank you very much. Good morning. You mentioned having two thirds of the country covered by wireline. I think in the past you've talked about an opportunity in enterprise with that added scale. If you've got any updates on that side? And then interested in your satellite direct-to-device opportunities. How do you see the business model for that, is that going to be a sort of a charge per text or some monthly subscription, any thoughts there about the financial opportunity that presents?

Simon on the satellite to mobile phone second part of your question. We're not prepared to talk about the pricing strategy yet on that. And so I would just park that. The first part of it is on the enterprise synergies. So two things you should separate in your mind: from a consumer standpoint, we covered two-thirds of homes passed in Canada with our Cable footprint. But on the enterprise side, we have been over a long period of time investing in a national fiber network that connects where it needs to with our existing Cable network. And so we are national on enterprise and even more so with concluding the Shaw transaction. And we're starting to see good healthy growth rates in the double digits on our enterprise side that we're quite pleased with. So we're seeing those, what I would call revenue synergies already starting to happen.

I believe there's an opportunity related to cost synergies, as mentioned by Tony, with the acquisition. We now have more fiber assets that we can utilize internally instead of relying on a third party for supplementation. This is a significant part of the cost synergy opportunity that we can pursue.

Makes sense. Thanks.

Thank you, Simon. Ariel, could we have one more question, please?

Certainly. Our final question comes from David McFadgen of Cormark. Please go ahead.

Okay, great. Thanks for squeezing me in. Just two quick questions. Tony, when you talked about your growth, you said Alberta and BC are your fastest-growing markets. Are you speaking primarily about the wireless business, or does that also extend to Cable? And then secondly, just a quick question for Glenn. When I look at the working capital and 2023 had an outflow of $627 million. It's obviously a big number. I was wondering, can you recover some of that in 2024, or do you think that, that was just needed now to sustain the business as it is? Thanks.

David, real quick, on Alberta and BC growth. We're seeing it in both, certainly in wireless, but we're also seeing a very healthy return to growth on the home product side that we're quite pleased with.

And then, David, on your question on working capital. Working capital is always a target for capital efficiency for us. I would point out that year-over-year we do have the impact of the Shaw acquisition rolling through in 2023 that you would not have seen in the prior year end of 2022. And so that's part of the increase. But we focus on that with particular enthusiasm around managing our inventory levels, managing our delivery schedules and the like, that's ongoing. I'm happy with the progress that we've made through the year. The scale side of this, that will be up year-over-year just because of the Shaw acquisition but I'm never satisfied with that level. That's always an ongoing priority file.

Okay, alright, thanks. Thank you for joining us on our call. And if there's any follow-up, please feel free to reach out to the IR team. Thank you.

Thank you.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.